Yes, a good deal is perception. So is "getting screwed." There IS a new paradigm at work when members of our profession think an honestly made gross profit is screwing the consumer.
What ways could dealers be more transparent, IDEAS anyone?
- Thread starter Jeff Kershner
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Everything is perception. And we do a horrid job of managing it.
I strongly believe we have aligned ourselves to a process instead of considering the consumer's perspective. The simplest part is where we completely ignore basic human psychology: most humans cannot transition from a party into full combat while keeping that transition smooth for the customer. What does that mean you ask....
Party = Meet & Greet down to the Test Drive. That's a really fun time with the customer where fantastic first impressions are made. Emotional high time for everyone.
Combat = it starts with the "let's go in the building" and lasts until the contract is signed. Most sales agents don't find this part fun because it is where they are under their manager's magnifying glass and, of course, the negotiations (especially trade numbers) can thwart the best "party." As soon as the walk into the building occurs any customer can sense the change in their sales person's demeanor.....basic psychological perceptions.
This is where we screw things up. We staff people who want to "party" and then force them to do "combat." Bad move. And this could be the single event that has permeated our industry with a rough reputation.
I strongly believe we have aligned ourselves to a process instead of considering the consumer's perspective. The simplest part is where we completely ignore basic human psychology: most humans cannot transition from a party into full combat while keeping that transition smooth for the customer. What does that mean you ask....
Party = Meet & Greet down to the Test Drive. That's a really fun time with the customer where fantastic first impressions are made. Emotional high time for everyone.
Combat = it starts with the "let's go in the building" and lasts until the contract is signed. Most sales agents don't find this part fun because it is where they are under their manager's magnifying glass and, of course, the negotiations (especially trade numbers) can thwart the best "party." As soon as the walk into the building occurs any customer can sense the change in their sales person's demeanor.....basic psychological perceptions.
This is where we screw things up. We staff people who want to "party" and then force them to do "combat." Bad move. And this could be the single event that has permeated our industry with a rough reputation.
Force who to do combat? Consumers are forced to do combat? Only when the seller is crude and artless. As sales professionals we should relish the negotiation and become good at it. After all, that's the justification for our income.
If all we are going to do is to become clerks, the job won't pay so well. Why would it? Get rid of the sales staff and gain a cost advantage on your competitors. Anyone tried this recently?
If all we are going to do is to become clerks, the job won't pay so well. Why would it? Get rid of the sales staff and gain a cost advantage on your competitors. Anyone tried this recently?
But there IS an easy answer to, "What can dealers do to become more transparent?" They can post their triple net cost, then advertise their margin. See how easy that was? Who wants to go first?
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You might be taking the word "combat" too literally. But if you're familiar with the road to a sale then you'd recognize how I've defined it and understand that this portion of the process can be combative. Whether it is the sales agent, sales manager, F&I manager or the consumer pushing it into a discomforting negotiating experience.
Kumbaya and all that stuff.
However, you're missing my point again. Basic human psychology does not stack up to the process we've built. Sales agents are either built to get a customer excited or to handle the negotiations side of the transaction (and those ones usually become managers). Very few can start the party and relish the art of being a skillful negotiator.
I may be taking your post wrong, but I get the feeling you're taking some shots at mine. However, it definitely seems like you're not comprehending what others are saying in this thread. @Ed Brooks mentioned, earlier, that a dealer's profit isn't a concern to the consumer.
Are you saying that we shouldn't change a thing, but rather should just make our sales people better negotiators? Sorry....we've been trying to do that since Henry Ford's assembly line made the car something for the masses.
Ed Brooks is wrong on this. Our profit IS VERY important to consumers. Yes, we always need to be better negotiators.
BTW, Road to the Sale is a generic term. There are many ways to approach that, some more artful than others. If consumers don't have to "fight" for their deal, their perception is they left money on the table. That hasn't changed. There will always be a percentage who will lay down for a first price/One Price. There aren't enough of them to make it a viable business model. Trying to sell cars based on how consumers answer survey questions has been a fool's game for decades.
Like I said previously, "If transparency is the answer, post your triple net cost and your margin separately and see if that "works." You need people to "pay too much" so others can "pay too little." That's where gross profit averages come into play with market share. By giving away margin out of fear of asking for it, and letting the cheap deals go for ideological reasons, you can't make it up on volume.
BTW, Road to the Sale is a generic term. There are many ways to approach that, some more artful than others. If consumers don't have to "fight" for their deal, their perception is they left money on the table. That hasn't changed. There will always be a percentage who will lay down for a first price/One Price. There aren't enough of them to make it a viable business model. Trying to sell cars based on how consumers answer survey questions has been a fool's game for decades.
Like I said previously, "If transparency is the answer, post your triple net cost and your margin separately and see if that "works." You need people to "pay too much" so others can "pay too little." That's where gross profit averages come into play with market share. By giving away margin out of fear of asking for it, and letting the cheap deals go for ideological reasons, you can't make it up on volume.
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@ruggles it sounds like you don't believe there is any need for change at all. I just can't agree with that on the basis that consumers perceive our industry to be dishonest. In my opinion there is a need for change and I think the basis of that change should come in how we staff/handle the road to a sale (generic or not). It isn't just adopting a one price policy; it has to be driven by aligning the employees to the overall process that makes consumers feel good about doing business with that store.
For me, I believe that the transparency aspect is really not the answer. Even if we did price everything at true actual cost, customers wouldn't believe us anyway. A customer doesn't recognize a good deal when they see it (for the most part).
@Alex Snyder is onto something. The shift of how the entire process is handled would promote a different feel for the entire transaction.
One of my wholesale sources is a pretty good size Chevrolet dealer. The dealer personally sells about 50 units a month, and I have had the "pleasure" of seeing him in action many times. I just shake my head with the way that he talks to people and how "professionally direct" he is. From the time that he greets a customer, it is 100% business. Not much small talk, not much joking and laughing. I heard him closing a deal a couple months ago, and it went like this: "Mine is priced at $xx,xxx, I will sell it for $xx,xxx. I will give you $x,xxx for your trade. So do you want to buy it or what?"
I am not saying that this is the way to do it, I am saying that his methods fall closely in line with the point that @Alex Snyder is making.
@Alex Snyder is onto something. The shift of how the entire process is handled would promote a different feel for the entire transaction.
One of my wholesale sources is a pretty good size Chevrolet dealer. The dealer personally sells about 50 units a month, and I have had the "pleasure" of seeing him in action many times. I just shake my head with the way that he talks to people and how "professionally direct" he is. From the time that he greets a customer, it is 100% business. Not much small talk, not much joking and laughing. I heard him closing a deal a couple months ago, and it went like this: "Mine is priced at $xx,xxx, I will sell it for $xx,xxx. I will give you $x,xxx for your trade. So do you want to buy it or what?"
I am not saying that this is the way to do it, I am saying that his methods fall closely in line with the point that @Alex Snyder is making.
@ Alex -
RE: "it sounds like you don't believe there is any need for change at all."
There is always a need for change for the better. I've watched 45 years of changes as a market participant.
RE: "I just can't agree with that on the basis that consumers perceive our industry to be dishonest."
That's not new.
RE: "In my opinion there is a need for change and I think the basis of that change should come in how we staff/handle the road to a sale (generic or not). It isn't just adopting a one price policy; it has to be driven by aligning the employees to the overall process that makes consumers feel good about doing business with that store."
And that isn't knew either. Our challenge has always been winning over each consumer one by one. When we win one over, we make a sale, and they typically answer surveys with at least relatively satisfied. Our mission is not to change the overall perception of consumers of our business. That's a fool's mission. But we could start by going back to stuff that previously worked, like answering the telephone with real human beings. Like reducing sales staff turnover so there is a higher chance for repeat business. If you want to make consumers happy lobby the FTC to allow us to agree to sell at MSRP so consumers don't have to worry about others getting a better deal than they do. Get consumers to understand it isn't the dealer's fault if they are upside down in their trade. Get them to understand dealers aren't at fault when their credit is less than stellar. There are many aspects to consumers perception of our business. And consumers behave differently than they answer survey/research questions.
What's your exact solution.
RE: "it has to be driven by aligning the employees to the overall process that makes consumers feel good about doing business with that store."
That s more than a little general. When we sell a car we have already accomplished this enough to earn their business. We'll do it over 14 million times this year. (SAAR minus fleet) Keep in mind, happy customers and no gross is a loser. The road is littered with the corpses of those who decided they knew a better way based on trying to satisfy consumers based on how they answer survey questions. Saturn, The Ford Collection, Priceline, Greenlight, CarsDirect.com, SCION. AutoBidsOnline, Toyota in Japan, thousands of dealers who flirted with One Price, etc. etc. TrueCar will be the next to go. But if you have a more specific idea, I'd love to hear it. There are many more than ONE consumer perception to be aligned with. Again, if you want to prove that absolute transparency is the answer, try that with your own money.
RE: "it sounds like you don't believe there is any need for change at all."
There is always a need for change for the better. I've watched 45 years of changes as a market participant.
RE: "I just can't agree with that on the basis that consumers perceive our industry to be dishonest."
That's not new.
RE: "In my opinion there is a need for change and I think the basis of that change should come in how we staff/handle the road to a sale (generic or not). It isn't just adopting a one price policy; it has to be driven by aligning the employees to the overall process that makes consumers feel good about doing business with that store."
And that isn't knew either. Our challenge has always been winning over each consumer one by one. When we win one over, we make a sale, and they typically answer surveys with at least relatively satisfied. Our mission is not to change the overall perception of consumers of our business. That's a fool's mission. But we could start by going back to stuff that previously worked, like answering the telephone with real human beings. Like reducing sales staff turnover so there is a higher chance for repeat business. If you want to make consumers happy lobby the FTC to allow us to agree to sell at MSRP so consumers don't have to worry about others getting a better deal than they do. Get consumers to understand it isn't the dealer's fault if they are upside down in their trade. Get them to understand dealers aren't at fault when their credit is less than stellar. There are many aspects to consumers perception of our business. And consumers behave differently than they answer survey/research questions.
What's your exact solution.
RE: "it has to be driven by aligning the employees to the overall process that makes consumers feel good about doing business with that store."
That s more than a little general. When we sell a car we have already accomplished this enough to earn their business. We'll do it over 14 million times this year. (SAAR minus fleet) Keep in mind, happy customers and no gross is a loser. The road is littered with the corpses of those who decided they knew a better way based on trying to satisfy consumers based on how they answer survey questions. Saturn, The Ford Collection, Priceline, Greenlight, CarsDirect.com, SCION. AutoBidsOnline, Toyota in Japan, thousands of dealers who flirted with One Price, etc. etc. TrueCar will be the next to go. But if you have a more specific idea, I'd love to hear it. There are many more than ONE consumer perception to be aligned with. Again, if you want to prove that absolute transparency is the answer, try that with your own money.
RE: "One of my wholesale sources is a pretty good size Chevrolet dealer. The dealer personally sells about 50 units a month, and I have had the "pleasure" of seeing him in action many times. I just shake my head with the way that he talks to people and how "professionally direct" he is. From the time that he greets a customer, it is 100% business. Not much small talk, not much joking and laughing. I heard him closing a deal a couple months ago, and it went like this: "Mine is priced at $xx,xxx, I will sell it for $xx,xxx. I will give you $x,xxx for your trade. So do you want to buy it or what?"
Try that as a rookie sales person. This dealer isn't doing business with most of these people for the first time. And that's the point. We've run off a lot of good talent and most consumers are meeting their sales person for the first time. Closing rations rise exponentially when your consumer is a repeat buyer.
I remember breaking into the business with the perception of a consumer. 45 years ago this store was what we would call "One Price/little negotiation." WE did pretty well because we had an extremely low overhead and a sales staff that had been there for a while. Our strategy was to give the customer a quote, which they readily took to our competition. You should try that sometime, then decide who is honest and who is dishonest.
Try that as a rookie sales person. This dealer isn't doing business with most of these people for the first time. And that's the point. We've run off a lot of good talent and most consumers are meeting their sales person for the first time. Closing rations rise exponentially when your consumer is a repeat buyer.
I remember breaking into the business with the perception of a consumer. 45 years ago this store was what we would call "One Price/little negotiation." WE did pretty well because we had an extremely low overhead and a sales staff that had been there for a while. Our strategy was to give the customer a quote, which they readily took to our competition. You should try that sometime, then decide who is honest and who is dishonest.
